U.S. stock futures lean lower

Oil futures rebound; chips set up for more weakness

EmilyChurch

LONDON (CBS.MW) -- U.S. stock futures turned slightly lower on Wednesday, as any enthusiasm from the prior session's late-day rally was offset by a rebound in crude prices and some more negative analyst comments toward chip stocks.

September S&P futures erased earlier gains to trade down 0.50 at 1,103.60 and Nasdaq 100 futures slipped 3.00 to 1,367.00.

The Dow Jones Industrials Average
DJIA, -0.67%
had closed Tuesday up 51 points at 10,174, erasing intraday losses of as much as 48 points.

October crude futures rallied 56 cents to $42.68, amid a raised oil outlook from Merrill Lynch. The contract had declined in 7 of the past 8 sessions for a total loss of $5.52.

Merrill lifted its 2004 price forecast for West Texas Intermediate (WTI) to $37.70 from $34.40 per barrel, and for average prices of beyond 2004 of $32.50 a barrel, to reflect current higher prices and the belief that OPEC will raise its targeted price band centerpoint by $3 to $5 per barrel.

"On top of the capacity-related issues we've discussed in our work for the past 19 months, there appears to be a host of economic work behind the scenes by a number of exporting nations to assess a value that balances the needs of both exporting and importing nations," Merrill said in a note to clients.

Intel Corp.
INTC, -0.82%
eased 4 cents to $21.25 in pre-open trading. The stock was a key mover on Tuesday as a host of Wall Street analysts cut their revenue forecasts of the chip sector bellwether ahead of its mid-quarter update on Thursday. See full story.

On Wednesday, First Albany said Intel would likely adjust its third-quarter revenue forecast to the low end of prior projections. The broker said, however, that the lowered outlook is already priced into the stock.

Smith Barney cut Intel's price target to $25.50 from $30. The broker said that while the chip sector is likely entering the final phase of price declines, there is still downside potential of about 20 percent as lowered estimates drive compression in industry valuations.

The stock had hit a 14-month low of $20.89 in intraday trading on Tuesday before closing down 31 cents at $21.29.

Elsewhere in chips, WR Hambrecht cut its third-quarter earnings and revenue estimates for equipment maker Teradyne
TER, -1.89%
and its price target to $17 from $25 on the belief that orders have slowed. ON Semiconductor
ONNN
was downgraded by Janney Montgomery Scott to "hold" from "buy," citing concerns over pricing and margins. Piper Jaffray thinks Altera's
ALTR, -0.96%
quarter has gotten off to a slow start, but left its estimates unchanged for the moment.

European techs were seeing a recovery; German memory chipmaker Infineon Technologies
IFX, +5.05%
was up 1 percent. More broadly, European markets were notching gains, bolstered by plans by French supermarket giant Carrefour to sell around 1 billion euro of underperforming assets and return capital to shareholders.

Focus stocks

Among stocks seeing early activity, Boston Scientific
BSX, -0.22%
fell $1.22, or 3.4 percent, to $34.51 in the pre-open after the stent maker indicated that third and fourth-quarter earnings would fall short of expectations.

SuperGen
SUPG
surged $1.30, or 20 percent, to $7.73 in pre-open trading. MGI Pharma
MOGN
said it would buy up to $40 million worth of SuperGen stock at $10 each, which represents a 54 percent premium over Tuesday's closing price, as part of an agreement that grants MGI Pharma exclusive rights to develop, manufacture and distribute SuperGen's anti-cancer treatment Dacogen. MGI was unchanged at $23.23.

Open Text
OTEX, -0.80%
slumped $4.01, or 19 percent, to $17.56 after the company reported lower fourth-quarter earnings late Tuesday. See full story.

Corinthian Colleges
COCO, +0.85%
ran up $1.14, or 10 percent, to $12.51 after the company topped Wall Street earnings forecasts for its fiscal fourth quarter. The company's first-quarter earnings estimate was in line with expectations.

Shares of British defense stock BAE Systems (BA) rose 1.8 percent amid another contract win for Airbus and as Dresdner Kleinwort Wasserstein lifted its rating on the stock to buy from hold, citing valuation. "A recovery in civil aerospace, good underlying defense growth and hopefully contract problems now solved, offer BAE the opportunity to re-establish more positive profit and share price momentum," the broker said.

Airbus, the Boeing
BA, -0.28%
rival, said Cebu Pacific, the Philippines' second largest carrier will buy twelve Airbus A319s and additionally lease two Airbus A320s to totally replace its existing fleet. This is the first time the low-cost airline has purchased aircraft from Airbus. BAE owns 20 percent of Airbus.

EBay
EBAY, -0.62%
said late Tuesday it has agreed to buy 3 million shares of Korea's Internet Auction for $325 million in cash. The purchase, made from a collection of institutional traders, will take eBay's stake in the online trading company to 86 percent from 62 percent. The San Jose, Calif.-based online auction company said it plans to pursue a tender offer for the remainder of Internet Auction's shares in the coming weeks.

The French government unveiled its plan to sell an at least a 9.6 percent stake Shares of carrier France Telecom
FTE, +1.13%
(013330). It could sell up to 299 million shares, or 12.1 percent of the telecom, to reduce the country's debt, the finance ministry said in a statement.

France Telecom may also sell between 1 billion and 1.15 billion euros of convertible bonds, the French government added. Shares were down 2 percent in Paris.

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